This archive report was first published on 19 August 2020.
On August 3, 2020, the Zimbabwe Stock Exchange (ZSE) reopened after a month-long suspension, but its performance has been dismal. The latest data release reveals a 21% dip since its resumption two weeks ago.
According to Bloomberg, foreign investors have sold stocks worth $2.5 million, contributing to the slump. The ZSE attributes the decline to foreign investor flight.
The government had halted operations at the bourse, citing volatility in the local currency caused by firms with listings outside the country. An investigation by the Ministry of Finance revealed a correlation between local currency price behavior and transactions patterns of dually listed shares, as well as the behavior of the parallel market.
The suspension of three firms - Old Mutual Ltd, PPC Ltd, and SeedCo Ltd - has hurt investor confidence, with many indices moving to the red territory. Despite government efforts to boost liquidity by releasing funds into the market, the results have been disappointing.
As part of its efforts to attract foreign investment, the Zimbabwean authorities have unveiled plans to set up the country's first US dollar-denominated bourse, the Victoria Falls Exchange (VFEX). The VFEX, a wholly owned subsidiary of the ZSE, is awaiting licensing by the Securities and Exchange Commission of Zimbabwe (SECZ).
